Turkish manufacturing downturn intensifies in March, PMI falls to 48

By bne IntelliNews April 1, 2015

Turkish manufacturing PMI survey data signalled a steepening downturn in the goods-producing sector in March, said Markit on April 1, noting that output, new orders and new export orders all fell at sharper rates during the month, and employment failed to grow for the first time in nearly six years.

The headline HSBC Turkey Manufacturing PMI fell from 49.6 to 48.0, the lowest reading since April 2009 and indicative of a marked overall deterioration in operating conditions with four of the headline index’s five components exerting negative contributions in March, the exception being stocks of purchases.

Purchasing activity remained broadly unchanged as firms faced the dual headwinds of declining demand and a steeper increase in input prices linked to the stronger $, meanwhile stronger cost pressures led to the steepest increase in prices charged for manufactured goods in nearly a year, said Markit.

Here are the highlight from the March survey:

* New orders received by Turkish manufacturers fell for the third month running in March, the pace of contraction accelerated to the sharpest since August 2011

* The same trend was evident for new export orders, despite the weakening of TRY against $

* Firms generally commented on weak domestic and international market conditions

* Output fell for the third month running, and at the strongest rate since April 2009

* Cost pressures intensified in March

*Input price inflation accelerated sharply to the fastest since March 2014, with companies widely attributing higher prices to the strengthening $

Turkish economy grew by 2.6% y/y in the final quarter of 2014 (market consensus: 2%), driven mainly by private demand. As a result, full year growth was 2.9% versus 4.2% in 2013. Households’ final consumption growth increased to 2.4% y/y in Q4 from 0.1% y/y in the previous quarter, but the weakness in private investment was evident in GDP data. Private investments rose by 0.9% y/y in the fourth quarter after rising 2.1% y/y in Q3, but public investments fell by 7.3% y/y that came on top of the 10.4% y/y decline in the previous quarter.

The government expects the Turkish economy to grow by 4% this year to create an $850bn economy but the markets’ forecast is a more moderate GDP growth of 3%.

Real GDP growth in Selected Major Sectors      
y/y, % 2014 2014/Q1 2014/Q2 2014/Q3 2014/Q4
Overall GDP 2.9 4.9 2.3 1.9 2.6
Agriculture, forestry and fishing -1.9 3.5 -2.6 -4.9 1.4
Industry 3.5 6.2 3.3 2.9 1.8
Manufacturing 3.7 6.3 3.0 2.7 2.8
Wholesale and retail trade 1.4 3.2 0.2 0.8 1.5
Construction 2.2 5.8 3.4 2.0 -2.0
Transportation and Storage 2.6 3.3 2.8 3.1 1.4
Finance and Insurance 7.0 14.0 7.1 5.2 3.0

Related Articles

ECB holds a meeting in Riga without Latvian central bank governor

The European Central Bank governing council met in the Latvian capital Riga on June 14 with the host, the beleaguered governor of Latvijas Banka Ilmars Rimsevics, not attending. Rimsevics ... more

One to two-notch downgrade implied for Turkey by spread on eurobond says RBI

A one to two-notch downgrade is implied for Turkey by the spread on its sovereign USD eurobond due 2028, Raiffeisen Bank International (RBI) said on June 12. In a note to investors, RBI analyst ... more

Croatia raises €750mn in 10-year Eurobond

Croatia issued €750mn through a Eurobond maturing in 2028 at a yield of 2.898% and bearing a coupon rate of 2.700%, the government announced on June 7. Improving macroeconomic ... more